In his third annual State of the State speech, Davis also called on California commercial and residential property owners to cut back consumption by 7%, by taking steps as simple as turning out lights when a room is empty or shutting down computers at night. He also proposed $250 million in cash incentives to replace inefficient refrigerators, washers and air conditioners with more efficient models.

"California's deregulation scheme is a colossal and dangerous failure," Davis told a joint session of the Assembly and Senate that was broadcast across the state and nationally on C-SPAN. "It has not lowered consumer prices, and it has not increased supply. In fact, it has resulted in skyrocketing prices, price gouging and an unreliable supply of electricity-- in short, an energy nightmare."

California's two largest utilities--Southern California Edison and Pacific Gas & Electric--helped to push deregulation through the legislature about five years ago, saying it would result in more competition and lower prices. Instead, the opposite has occurred: After reaping billions by selling off most of their power plants, the big utilities are now paying exorbitant amounts to buy power from many of the smaller companies that deregulation helped to spawn.